A CLINTON FRIEND ADMITS MAIL FRAUD AND TAX EVASION

By STEPHEN LABATON,

Published: December 7, 1994

LITTLE ROCK, Ark., Dec. 6—
Webster L. Hubbell, a trusted friend of Bill Clinton and former law partner of Hillary Rodham Clinton who became one of the nation's top law-enforcement officials, admitted today that he stole at least $394,000 from his law partners and more than a dozen clients, including the Federal Government, before he arrived in Washington last year.

In a Federal district court here, Mr. Hubbell pleaded guilty to two felony counts of mail fraud and tax evasion. His head bowed, he confirmed that on more than 400 occasions he submitted bills to cover personal expenses from 1989 to 1992 and concealed the theft with phony expense vouchers and inflated accounts of the hours he worked for clients.

Mr. Hubbell also failed to report the income to pay taxes on the money, including on the tax return he filed last year for 1992 while serving as the White House's liaison to the Justice Department.

Once referred to by Mr. Clinton as his closest friend, Mr. Hubbell spoke today in a voice choking with emotion as he asked forgiveness for betraying the faith of those who cared most for him.

"I want this court to know that I take full responsibility for my actions and accept the full and complete consequences for them, which are substantial," he said slowly and barely audibly, supported by his lawyer, John Nields, and pausing regularly in a futile attempt to keep his composure.

"I know it is a painful day for my family and friends," Mr. Hubbell continued. "I hope that by pleading guilty I've taken the first step of easing my friends and family's pain, and only hope it will justify restoring their faith in me."

Outlining the case he was prepared to try against Mr. Hubbell, the prosecutor, W. Hickman Ewing Jr., said Mr. Hubbell had systematically taken money from the Rose law firm here, often by simply filling out expense vouchers and taking the proceeds to pay off charges he had incurred on three American Express cards, three Visa cards and four MasterCards. He said the expenses included such items as clothing purchases in Dallas and at a Victoria's Secret store in Little Rock.

Mr. Ewing said investigators had found that the expenses he billed included more than $26,000 at restaurants, which the prosecutors decided not to count as part of the $394,000 total because they could not determine how much of the food expenses were personal and how much were for business.

As part of the plea agreement, Mr. Hubbell pledged to provide "substantial assistance" to the investigation being conducted by the Whitewater special counsel, Kenneth W. Starr.

The charges against Mr. Hubbell are only tangentially related to the thrust of Mr. Starr's inquiry, but the prosecutor's charter gives him the authority to act on any crimes he learns of in the course of investigating the Whitewater real estate venture. Some of Mr. Hubbell's fake billings were for work his law firm was doing for Federal regulators looking into the failure of a savings association, Madison Guaranty, owned by the Clintons' partner in the Whitewater development project.

Mr. Hubbell, who resigned as Associate Attorney General in March after reports emerged of a dispute with his former partners at the Rose firm here over his billings, has yet to be debriefed by the Whitewater prosecutors.

What he intends to tell them remains shrouded in secrecy. That has fueled a sense of anxiety at the White House and one of opportunity among Congressional Republicans. It may be months before it becomes known whether he turns into a significant witness for the prosecution, or is merely its highest ranking casualty.

This evening, the White House released a written statement in which Mr. Clinton expressed sadness about what had befallen his longtime golfing partner and confidant.

"Webb Hubbell is an old friend, and Hillary and I were saddened by today's events," Mr. Clinton said in the statement. "We should also remember that Webb is a man who has given much to his family, his community and his country. The matter is in the hands of the court, and I don't think it would be appropriate to say anything more at this time."

David E. Kendall, the Clintons' personal lawyer, today tried to distance his clients from Mr. Hubbell. "This matter simply does not concern the President, the First Lady or the Whitewater Development Company in any way," Mr. Kendall said.

On each count, Mr. Hubbell faces a maximum of five years in prison and a fine of up to $250,000, although the range under the sentencing guidelines used by judges that is in today's plea agreement is from 21 to 27 months.

That range may be increased if investigators find that he took more than $394,000. And it can be decreased if he cooperates with the Whitewater prosecutors, who under the plea agreement are required to request a reduction in his sentence if in their judgment he provides "substantial assistance."

Mr. Starr said here today that he was looking forward to Mr. Hubbell's cooperation.

For 15 years, Mr. Hubbell has been among the closest of the Clintons' confidants. As Governor, Mr. Clinton appointed him to serve briefly as the Chief Justice of the Arkansas Supreme Court, and later, he was enlisted to help draft an ethics law. What makes Mr. Hubbell's agreement to assist prosecutors so significant is that if he were so inclined, he is in a position to give an insider's account of several areas being examined by Federal investigators.